A Multi Product Joint Ordering Model with Dependent Setup Cost

Chung-Mei Ho Chern
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Chung-Mei Ho Chern: AMC Inventory Research Office, Institute of Logistics Research, Philadelphia

Management Science, 1974, vol. 20, issue 7, 1081-1091

Abstract: A multi product, continuous review inventory model with dependent setup cost is studied and a joint ordering policy is defined. The development of the model is based on the independent (R, Q) policy. A can order point is derived for each product such that if the inventory level of one product drops to its reorder point, all products with inventory level less than or equal to their can order points are ordered together. The analytic results are given for the unit Poisson demands. Simulation experiments are used to compare the joint ordering policy with the independent ordering policy for the case of Stuttering Poisson demands. It is learned that the joint ordering policy achieves a substantial saying in total cost over the independent ordering policy.

Date: 1974
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